I’m writing this from a BIPV Summit in San Diego. There are about 100 people attending, rather scant for a solar event, but it's an interesting group.  Utilities, roofers, architects, and the usual suspects from the PV world -- Suntech, Solyndra, Heliovolt, some startup called Pythagoras Solar. First let’s make the distinction between BAPV and BIPV.  BAPV is Building Applied PV -– it’s a retrofit added to the building long after construction, while BIPV is Building Integrated PV and it means just that -- the architects, building designers, building owners designed the photovoltaics into the skin and roof of the building from day one. And as of now -- it’s a tiny market.  Lots of potential, but tiny.  Nadav Enbar, Research Manager, of Energy Insights, estimates that the total amount of installed BIPV, even with the most aggressive estimates, is about 70 megawatts.  Lux Research says that 97 megawatts was installed last year but they are probably including BAPV as well.  Suntech's Leonard May, Director of BIPV Products, claims to have shipped $80 million in BIPV last year. And that’s a tiny sliver of world PV. But it feels like we’re at the inflection point of this market.  The new format of the U.S. investment tax credit and Europe’s new Energy Performance of Buildings Directive are policy tools that will  serve to accelerate BIPV penetration. Despite the potential, there are very few pure-play BIPV firms, and there are very few VC-funded BIPV firms. Here is a small gallery of examples of BIPV.  More info on BIPV in the next blog post.

Efficiency Promises versus Broken Promises The promise of CIGS cells is that high-efficiency cells can be achieved using less than 1/100th the semiconducting materials required for silicon-based PV cells. At the same time, CIGS cells present a challenge because four-layers of semiconducting material (copper, indium, gallium and di-selenide, or in some cases sulfur) must be deposited correctly to create an efficient cell.  (Image on right is a Global Solar CIGS cell)

Correction: An astute reader points out that I got this a bit wrong. "The CIGS in the solar cells is not a four-layer stack (and more particularly, di-selenide is not a material per se)  Rather, it is a chemical compound, a crystal where one copper atom, one indium or gallium atom and two selenium atoms (hence di-selenide) make up each basic unit. You can talk about the challenge of getting four-layer structures right, but then it’s the structure back contact–absorber–buffer–window."

I stand corrected.  On with the story... Every photovoltaic-themed PowerPoint ever presented since the birth of the sun includes the NREL PV efficiency chart. It’s tradition to include it, so here it is. The NREL chart bears some of the blame for the billions of dollars of VC investment (and public company investment) into CIGS development.  Here's a list of the top five recipients of VC funding in the CIGS/CIS universe.

Firm                   VC Received Solyndra             $600M+ Nanosolar           $500M MiaSolé               $300M SoloPower           $235M+ SulfurCell            $165M+

That’s $1.8 billion dollars right there and the figure easily exceeds $2.3 billion when one counts the remaining CIGS players. Some of that irrational VC exuberance is due to the hero experiments charted by NREL. Its champion numbers show a potential efficiency for CIGS of 19.9 percent -- exceeding CdTe’s 16.5 percent, equal to polycrystalline silicon, and approaching the neighborhood of single crystal silicon’s 24.5 percent. Those numbers are encouraging to investors as it means that there exists a thin film solution that can potentially disruptively displace the incumbent material, silicon, in a high growth $20 billion dollar market. However, according to an industry source, that pioneering CIGS work was performed in ultra-high vacuum (UHV) in a tool with 10 E10 (10 range) vacuum, a pristine vacuum environment. How much performance does one give up when relaxing the vacuum environment for the sake of manufacturing? CIGS efficiency is sacrificed by relaxing the deposition conditions for the sake of manufacturing:

• By ~8 percent to 9 percent in going from UHV to normal vacuum levels

• By ~9 percent to 10 percent in going from UHV to ambient conditions

Bottom line here is that real-life CIGS efficiencies, when manufactured in anything less than a pristine vacuum environment are never going to come close to the incumbent silicon efficiencies.  The following chart bears that out.

CIGS Firm                      Claimed Efficiency for Cell or Module Ascent Solar                       9.6%* Daystar                               10%-11.5% Global Solar                       10.2%* HelioVolt                            12.2% MiaSolé                              10.2%? NanoSolar                          9-10%? Shell Solar                          12.8%* Solyndra                             NA Wuerth Solar                      13.0% * confirmed by NREL

Despite theoretical CIGS efficiencies approaching 20 percent -- it appears that the best this crop of CIGS firms is going to be able to produce is in the 10 percent to 12 percent range.  That’s still better than CdTe and low efficiency is certainly not preventing First Solar from ramping up to GW scale. But efficiency is not going to be a significant differentiator amongst the CIGS rivals. One other caution about these efficiency claims: Even with an NREL confirmation -- most of these figures represent best efforts on small samples, not production averages on large areas over time. This is an excerpt from the February issue of the Greentech Innovations Report. This issue focuses on CIGS manufacturing and also reports on every greentech funding in January 2009. Upcoming issues focus on ocean power, algae, and energy storage. You can buy this individual issue or purchase an annual subscription here.

While nearly all the players in the solar industry count the recent extension of the U.S. investment tax credit as a win, perhaps no group stands to benefit more from this legislative victory than utility companies. Previously, utilities were subject to an exemption barring them from taking advantage of a 30 percent investment tax credit for solar power projects. This exemption effectively eliminated utilities from owning solar power stations outright, forcing them instead to buy solar-generated electricity from third-party financiers under power purchase agreements. Utilities were also bound on the other side by state renewable portfolio standards, especially in states with solar cutouts. These two forces left some utilities in a precarious position -- unable to include solar power stations as a capital asset for rate-basing, but forced to pay higher-than-avoided cost prices for electricity. Lifting the public utility exemption, which lets utilities take advantage of the 30 percent investment tax credit, will make solar power system economics more attractive for utilities than in the past. Tax equity potential combined with the continued downward march in module average selling prices and cheaper, faster installation methods may provide the necessary groundwork for a shift in how utilities relate to the rest of the solar industry. The most significant aspect of this is the allowance the exemption’s elimination gives utilities to start acting like, well… utilities. In nearly all states, utilities participate in a tightly regulated process that determines the return on equity they are able to receive for a given asset investment. Return on equity is recouped from consumers in the form of a tariff on top of the electricity rate. Rate-basing is standard practice, but can only be done when the target asset is under utility control. With solar this was previously not the case. Instead of owning projects outright, the exemption forced utilities to enter into power purchase agreements with solar financing companies like SunEdison. The new legislative regime may force a shift in utility renewables strategy, moving them from electricity buyers to system buyers. With this shift it is likely utilities will start buying solar power systems outright from turnkey project developers, effectively cutting out the third-party financiers that have become so prevalent in the past four or five years. This is a net benefit for the solar industry. First, it will get utilities to think constructively about including solar power in their asset portfolio. Second, it will allow more projects to be built, giving domestic solar suppliers a market potentially on par with those of their German and Spanish counterparts. Getting utilities to think constructively about solar power is crucial for increasing the penetration of solar power in the domestic generation portfolio. Utilities must now face crucial questions regarding the integration of solar power into their preexisting load. This will likely lead to an increase in the deployment of next-generation transmission and distribution capabilities as well as the increasing use of smart grid technologies to manage a hybridized load portfolio. Ultimately, lifting the utility exemption may be the single best thing for the domestic solar industry. Utilities, which have always had access to lower-than-average costs of capital will be able to outcompete third-party financiers in this increasingly dry credit market. This means more projects will get built at lower prices, but with stable and known rates of return. A little certainty is good for any industry, but especially for one that has gone so long without it.

And the hits just keep on coming. Pure-play ethanol company VeraSun sent out a press release late Thursday night announcing they retained Morgan Stanley to help "evaluate strategic alternatives." That's pennies-on-the-dollar talk if I've ever heard it. VeraSun's stock price dropped 75 percent on Wednesday on news the company will post losses of $63 million to $103 million dollars this quarter because of its failed corn purchasing strategy. The beleaguered ethanol company exited its short positions after corn jumped from $6 per bushel in May to over $8 per bushel in July, and started buying up contracts at the then-market price. VeraSun got caught with overpriced contracts when corn darted below $5 per bushel in August. In an 8-k filing the company submitted to the SEC on Tuesday VeraSun said "we expect to record average corn prices of between $6.75 and $7.00 per bushel during the third quarter of 2008," well above the prevailing market rate. The same day the company announced it would offer 20,000,000 shares of common stock to gain back some of the money it lost in the botched corn trades. Unfortunately for VeraSun, this was not the week to raise capital. Investors started a bolt for the exit once they learned the company needed to raise money to sustain its substantial losses. Two days later VeraSun has withdrawn its share offering - perhaps a more "strategic" deal is in the offing. However, if neither lenders nor the U.S. Government were willing prop up Lehman Brothers, you can bet Hank Paulson won't give VeraSun even a passing thought as he crunches through his morning meusli. I wouldn't be surprised if VeraSun goes down the strategic alternative road sometime in the next week. Whether that's bankruptcy or acquisition remains to be seen. Morgan Stanley, it's underwriter and advisor, looks headed for the same path tonight as the investment bank reportedly mulls a 49 percent offer from China's CIC. This mess is far from over. And greentech companies in the project development and construction stage, with their large capital requirements and low revenues, will feel the pinch over the next few weeks. Developing...

Sydney, AUS – It’s the last day of a round-the-world solar trip that’s taken me through Spain and Australia with pit stops in the UK and Hong Kong. I’ve met a lot of really interesting people – a Belgian PV engineer, a suicidal Valencian cab driver, an overly talkative Aussie faith healer, and kangaroos. That’s right. Kangaroos. I haven’t added up the numbers yet, but it’s possible I’ve spent more time on airplanes in the past week than on the ground. Most of my photos from this trip are from inside airports. Ooh! There’s Kowloon Bay! Right there – behind Terminal A. In between bits of hallucinatory airplane sleep I’ve had a lot of time to think about greentech and the renewable energy industry. Over the course of this week I’ve met analysts, technology suppliers, investors and project developers. Only one, Travis Bradford, was American. And Travis, who was on a Euro-dash of his own, is more global citizen than your average putz from Padukah. Granted, I wasn’t in the U.S. But from all the talk there about leading the greentech industry through innovation and investment, the absence of America from the conversation was striking and perhaps a bit revelatory. The other day Rob Day wrote an interesting piece on energy independence, arguing the concept of energy independence deserves a demand-side focus. Sure, when we’re thinking about fossil fuel, “The single most ‘Energy Independent’ barrel of oil is the one not consumed.� But underlying the notion of energy independence as an end-use issue is a more complex problem regarding the technology driving consumption Energy independence in terms of renewables is both a demand and a supply issue. In theory, deploying renewables at scale would allow us to maintain our consumption levels while reducing our demand for fossil fuels. The supply of fuel is free – sun, wind, tides, ground heat, etc. – though the supply of technology used to convert that free fuel into energy isn’t. If you can imagine a future powered by renewables, then you should also be able to imagine a future where a new kind of energy independence issue rears its ugly head. While it’s not linked to fears of Middle Eastern or Venezuelan oil, it’s one we’re equally familiar with, one that’s equally xenophobic, and one that’s equally idiotic. The issue of globalization and international is inextricably linked to the development of green technology and the growth of the renewables industry. Whether it’s Brazilian thermochemical lignin convertors, Chinese solar cells, or German turbine nacelles, the technologies driving the growing penetration of renewable energy are, by and large, not coming from the U.S. The solar industry, because of its relative maturity, is a good example of this. The commoditization of input materials and secondary goods – polysilicon, cells, wafers, modules – has driven the emergence of a global supply chain. While some of the ideas driving this supply chain may start in the U.S., when the vapor depositor hits the epotaxial layer, it’s increasingly not going to happen in this country. Take SunPower, one of the U.S.’s leading solar companies. It started out as a concentrating PV company, moved into optics and optoelectronics (I found out this week SunPower occupied a pretty large piece of the IrDa market), and then finally into flat plate PV. It’s highly efficient panels, derived from the company’s work in CPV years ago, have high average selling prices but fetch fairly small margins. If markets in the U.S. and Spain fail to meet demand projections next year and prices fall, a situation that’s looking more and more likely, SunPower’s margins will get even smaller. Good thing most of its manufacturing capacity is located in Malaysia. Without that, it probably wouldn’t have any margins at all. I’m waiting for the day that some politician rails against Chinese PV because the factory workers in Shenzhen Took Our Jobs. The problem is that those weren’t really our jobs anyway. Even less so because that same politician probably also voted against extending the investment tax credit or a national RPS, while voting in favor of expanding offshore drilling. Energy independence is a joke and a myth – and that’s a good thing. No one talks about computer or t-shirt independence, yet neither computers nor t-shirts are made in the U.S. Even if the federal government took the step of actually supporting a renewables industry in the U.S., it wouldn’t be long before most domestic greentech companies move their operations somewhere else. Companies like A123 and First Solar have already figured that out – the rest will soon follow. We'll need to accept a global supply chain in renewables in the same way that we need to accept one for other industries. The difference between renewables and other industries, however, is that not doing so will cost us a lot more than just some jobs. When utilities and power retailers talk about security of supply, they’re not talking about natural gas reserves or coal contracts. They’re talking about power over-the-lines in whatever 10-minute increment they happen to be in at the moment. Regardless of how efficiently we use fossil fuels, they suffer from volatile prices, uncertain supply, and perpetually increasing demand – all bad conditions from the utility’s perspective. If, instead of gas turbines or coal steam boilers, power producers used renewables, the price and security of their supply would be much more stable. Getting to that point requires a steady stream of cheap renewable technology – something available only if we accept the idea that true energy independence is both undesirable and impossible to achieve.

We'll always have South Korea. So goes the constant refrain from PV module manufacturers who've looked in the crystal ball and seen a future of dry markets in the U.S. and Spain. The current thinking is that Congress's failure to renew the solar investment tax credit will significantly dampen demand in the U.S., Spain's inability to make a decision on the direction of their solar policy will cause more than a few solar companies to begin looking elsewhere for new product markets. Even if Spain were to come clean before the September deadline, the government is likely to announce a capacity ceiling of between 500 MW and 1.2 GW, with a €0.10/kWh - €0.15/kWh drop in the country's feed-in tariff - it stands currently at €0.42/kWh. And, really, it's not like anyone's going to diversify into Germany. So what's a solar company to do? South Korea has steadily built its solar industry over the past few years. In 2006, the country was importing 61 percent of its residential solar panels. By July 2007, it had cut that number to 45 percent, while growing its installed capacity from around 3.5 MW of grid-tied in 2005 to slightly more than 100 MW at the end of last year. As if by magic... Actually, as if by a combination of a $0.70/kWh feed-in tariff (that's 0.45 in Travis dollars) and the concentration of metals manufacturers and electronics companies - Hyundai Heavy, DC Chemical, LG, Samsung, etc. Although the country has worked pretty hard to build a domestic supply market, a lot of companies - especially American companies - have looked to South Korea as an enormous growth opportunity. Certainly building out in South Korea would be better than broaching the bureaucracy of the French market or the regulatory 'uncertainty' of the Italian market, or even the slightly strange feta/silicon mix content requirement in Greece. But that window now looks like it's closing, and faster than a lot of producers had expected. South Korea has already reached the 100 MW feed-in tariff ceiling, and that $0.70/kWh rate may have proven a little too rich. The government is now threatening a 30 percent rate cut, instead of the orderly digression it had proposed at the outset. One explanation, again, is the country's desire to grow its domestic industry. Back in college, the South Korean auto industry was the textbook example of import industry substitution in one of my international trade classes - subsidized to the hilt and pushed on the government by steel producers who couldn't compete with the cold rolling Japanese. I'm not saying that's happening here... but maybe it's happening here. Another explanation is that the tariff is running dry, and there's little political will to replenish it. Sound familiar? So let's come down from the guessing and bring some evidence into this situation. Yesterday I was forwarded a press release that I found kind of... stunning. Yingli Green Energy, one of China's largest solar companies and a fairly successful vertically integrated firm, was happy to broadcast the fact that "it has entered into five new sales contracts to supply an aggregate of more than 7 MW of PV modules to five companies in Korea." Right. Back in the market heyday of 2Q 2007, Chinese execs were doing these kinds of deals in their sleep, or with Elon Musk and a bottle of baijo in a Chengdu karaoke parlor. Is Yingli's willingness to do (and announce!) such small deals a sign of leaner times to come? The company's going to produce around 600 MW over the next year, though their 2008 module sales guidance has the company coming in between 255 MW and 265 MW of module shipments - only 100 MW more than they sold in 2007. This isn't a criticism of Yingli, but just some evidence that producers may have already made their bets on a low demand scenario, and that South Korea - the one shining light for 2008 - may not come through after all.